Page 1 PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB5251 Project Name Social Investment Fund II Project Second Additional Financing Region EUROPE AND CENTRAL ASIA Sector Other social services (100%) Project ID P117301 Borrower(s) GOVERNMENT OF MOLDOVA Republic of Moldova Implementing Agency Moldova Social Investment Fund 124 Stefan cel Mare Street, Office 315, Mun. Chisinau Moldova MD-2001 Tel: (373-22) 279-121 bpopadiuc@msif.md Environment Category [ ] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared November 23, 2009 Date of Appraisal Authorization Date of Board Approval January 26, 2010 1. Country and Sector Background There is compelling evidence of depression-scale pressures on incomes in rural areas in Moldova. According to the National Bureau of Statistics, the producer sales price of agricultural products fell by a stunning 46 percent during the first half of 2009, compared to a year earlier. Moreover, the National Bank reports that personal transfers through the payment system, the best indicator of workers’ remittances, fell by a third during the first semester of 2009, compared to the same semester a year earlier. This strikes rural areas hardest because, according to the Household Budget Survey, 71 percent of migrants come from villages and 62 percent of remittances go to villages. An International Organization for Migration (IOM)-supported study found the rural migrants were most likely to be low-skilled male workers in Russia, and thus most likely to have lost income because of the end of the Russian construction boom and the depreciation of the Ruble. The early statistical evidence indicates that these shocks damaged the well-being of rural households. The recent joint donor assessment report compares households during the first semester of the crisis, 2008 Q2 and 2009 Q1, with the same semester a year earlier. It finds a more than 25 percent decline in rural income from self-employment in agriculture. In villages, household consumption of food declined by 17 percent. 2. Objectives (a) The original project objectives are to “contribute to the implementation of the Economic Growth and Poverty Reduction Strategy by empowering poor communities and vulnerable population Page 2 groups to manage their priority needs.” The National Development Strategy has replaced the earlier Strategy, which ran its term to expiration. (b) The proposed Second Additional Financing retains these original project objectives and adds an economic crisis-related objective: to contribute to employment and wage incomes in selected poor rural communities during the current economic contraction and during the recovery. 3. Rationale for Bank Involvement These events justify investments to support the rural population through this downturn. The proposed Second Additional Financing for the Moldova Social Investment Fund II (MSIF II) Project would address this cyclical slump by generating a counter-cyclical surge in wage incomes in poor rural areas. This is a positive means to address the crisis because the emphasis is on earned income and because the rehabilitated community infrastructure is useful in delivery of social and economic services to the community. For these reasons, the proposed Financing would support the new Moldovan Government’s anti-crisis program. 4. Description · The original Project became effective on September 15, 2004, with an IDA Credit of US$20 million and total financing of US$29.17 million. The First Additional Financing became effective on August 28, 2009, with an IDA Credit of US$5 million and total financing of US$5.85 million. The rating on the last Implementation Status Report (ISR) for realization of the Development Objectives is “Satisfactory” and the rating for Implementation Progress is ‘Highly Satisfactory.’ · The MSIF II Project invests in community participation, in community infrastructure sub- projects, and in the system for delivery of social care services to vulnerable groups. The First Additional Financing scaled-up the community infrastructure component of this Project and increased the role of local governments in the management of their investments. · The proposed Second Additional Financing would further scale-up the community sub-project component, and importantly, it would increase the labor-intensiveness of works, and deliver as much employment as possible in 2010 and 2011, when economic conditions are likely to be weak · With the proposed Second Additional Financing, MSIF should be able to implement about 180 community infrastructure sub-projects. By emphasizing simple investments, MSIF should be able to implement 140 infrastructure sub-projects in poor village and 40 in small towns in 2010 and 2011. This assumes that architectural and engineering studies will be necessary for only 100 of the 180 sub-projects. 5. Financing Source: ($m.) BORROWER/RECIPIENT 0 International Development Association (IDA) 20 Local Communities 2.5 SWEDEN: Swedish Intl. Dev. Cooperation Agency (SIDA) 2.7 Total 25.2 Page 3 6. Implementation The Second Additional Financing will be implemented by the MSIF project unit. MSIF operates as a not-for-profit, semi-governmental institution. It has been successful in implementing the Project to date, passing the World Bank team’s regular financial management, procurement, and engineering reviews. The MSIF unit recently passed an intensive multi-year inspection by the Moldovan Accounting Chamber. The financial audit report for 2008 resulted in a clean opinion. MSIF delivered high quality development outcomes in communities where it intervened, when compared with outcomes in similar baseline communities, according to an evaluation study by Bernard Brunhes and CBS-AXA (2008). 7. Sustainability The MSIF Project supports the rehabilitation or construction of infrastructure which are operated using funds from local government budgets. Moreover, the rehabilitation usually lowers the cost of operation, for example by lowering natural gas consumption through insulation and through the installation of more efficient boilers. The community confirms its choice of its sub-project in a public meeting, and this reinforces its commitment to maintenance and operation of the infrastructure. One of the strongest commitments comes in the form of contributions to the sub-project from local governments, enterprises, and even households. 8. Lessons Learned from Past Operations in the Country/Sector · Village and small town governments are proving increasingly capable, with some training, of managing planning for their own development, managing funds and procurement, and supervising the rehabilitation of their civil works sub-projects. · MSIF is the institution best able to support local government and their communities in carrying out high quality infrastructure investments. 9. Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Yes No Environmental Assessment ( OP / BP 4.01) [X] [ ] Natural Habitats ( OP / BP 4.04) [ ] [X ] Pest Management ( OP 4.09 ) [ ] [X] Indigenous Peoples ( OP / BP 4.10) [ ] [X] Physical Cultural Resources ( OP/BP 4.11 ) [ ] [X] Involuntary Resettlement ( OP / BP 4.12) [ ] [X] Forests ( OP / BP 4.36) [ ] [X] Safety of Dams ( OP / BP 4.37) [ ] [X] Projects on International Waterways ( OP / BP 7.50) [ ] [X] Projects in Disputed Areas ( OP / BP 7.60) * [ ] [X] The Second Additional Financing may support new and labor-intensive types of sub-projects and in particular: small repairs, village parks and stadiums, and clean-up of illegal solid waste dumps. MSIF * By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas Page 4 will develop environmental guidelines for these works, will consult locally, and will release the final guidelines locally, before beginning any of these types of sub-projects. 10. List of Factual Technical Documents · Bernard Brunhes International, France and CBS AXA, Moldova (2008). Assessment of MSIF 2 project impact on the beneficiaries: Final report, Chisinau, Moldova, January 30. · Expert Grup (2009). Impact of the Global Financial Crisis on Local Communities in Moldova . Report sponsored by UNDP, Chisinau, Moldova, September 8. · International Organization for Migration (2009). The Socio-economic Impact of the Economic Crisis on Migration and Remittances in Moldova: Early Findings. Chisinau, Moldova, Spring. · UNDP, UNICEF, IOM, and World Bank (2009). Impact of the Economic Crisis on Poverty and Social Exclusion in the Republic of Moldova. Written by Thomas Otter, Chisinau, Moldova. October 31. 11. Contact point Contact: Menahem M. Prywes Title: Senior Economist Tel: (202) 458-0433 Fax: (202) 614-1665 Email: Mprywes@worldbank.org 12. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Email: pic@worldbank.org Web: http://www.worldbank.org/infoshop